Developer, still looking to get financing, will use less glass in effort to trim costs

Sep. 26, 2013

West End Summit in Nashville.

Written by

The Tennessean

Amid mounting skepticism about his chances of building a pair of massive towers in Midtown, developer Alex Palmer has tweaked the West End Summit plans to try to improve the project’s financial feasibility.

In the most visible change to the original $260 million project, Palmer said the design has changed from all-glass buildings to a combination of glass and architectural precast concrete.

Palmer, meanwhile, said negotiations are continuing with potential equity partners, acknowledging that financing of the project has taken longer than expected.

“This is a sensitive time in the negotiation of the West End Summit project,” he said.

Palmer’s latest comments come as HCA Holdings, Inc. has said that it is keeping open all headquarters options for its Parallon Business Solutions and Sarah Cannon Research Institute units that were to bring a couple thousand jobs to the towers at West End Summit.

For instance, the 19-acre OneC1TY health care technology campus planned at 28th/31st Avenue Connector off Charlotte Avenue near HCA’s corporate headquarters and a 35-acre site at Charlotte Avenue and 11th Avenue North that owner Northwestern Mutual and Boyle Investment Co. plan to develop are being cited in local real estate circles as alternatives to Palmer’s site for HCA.

Palmer says that he has secured debt financing that represents 75 percent of the project price. He also said the InterContinental Hotel is still committed as the top hotel for his development. Last week, he said a separate financing package for the up to $70 million hotel is done.

Meanwhile, Palmer still must raise the remaining 25 percent equity in order to move forward with the office project.

The developer also acknowledged that a lien had been put on the property by an excavation company, but that it should be resolved and wouldn’t affect financing.

David R. Hendrickson, a managing director of real estate investment banking at Jones Lang LaSalle in Chicago who isn’t involved in talks between Palmer and his potential equity partners, said any delay in those discussions is likely because of differences between the parties about how much return each partner would get for its investment.

“Those negotiations are complicated and they take a long time to come together,” he said, adding he isn’t surprised that it has taken Palmer this long to wrap up financing.

The HCA business units are expected to take up roughly three-fourths of the 800,000 square feet of leasable space in the two towers. Such large tenants typically require option or expansion rights for additional space, which makes it challenging to lease the remaining space until the project is much closer to completion, Hendrickson added.

Getahn Ward covers growth and development for The Tennessean. Contact him at 615-726-5968 or at gward@tennessean.com.